New fund offer: DSP Mutual Fund launches two new schemes; ETF and index fund based on Nifty Top 10 Equal Weight
DSP Mutual Fund has launched India’s first ever Nifty Top 10 Equal Weight Index Fund and ETF, which invests equally in the top 10 Indian companies in Nifty by free-float market capitalisation.
The DSP Nifty Top 10 Equal Weight Index Fund & DSP Nifty Top 10 Equal Weight ETF aims to capitalise on the relatively better valuations of Top 10 stocks compared to Nifty 50 & Nifty 500 based on metrics like p/e ratio, return on equity and return on assets ratios.
About DSP Nifty Top 10 Equal Weight ETF
An open-ended scheme, DSP Nifty Top 10 Equal Weight ETF aims to replicate the Nifty Top 10 Equal Weight Index's returns. The new fund offer (NFO) period, starts August 16 and ends on August 30, 2024.
The minimum investment for this ETF is ₹5,000. It is important to note that there is no exit load for creation unit size redemptions by Market Makers or Large Investors. However, for other unit sizes, the ETF cannot be directly redeemed from the fund and must be sold on the stock exchange.
Scheme objective: The scheme aims to provide returns that, before expenses, correspond to the total return of the underlying index (Nifty Top 10 Equal Weight TRI), subject to tracking errors. There is no assurance that the investment objective of the scheme will be achieved.
About DSP Nifty Top 10 Equal Weight Index Fund
The DSP Nifty Top 10 Equal Weight Index Fund is an open-ended scheme tracking the Nifty Top 10 Equal Weight Index. Similar to the ETF, this NFO starts from August 16 to August 30, 2024. Unlike the ETF, the index fund has no exit load, even for switches between Direct and Regular Plans. The minimum investment for this fund is significantly lower at ₹100.
Scheme objective: The investment objective is to generate returns that are proportional to the performance of the Nifty Top 10 Equal Weight Index, subject to tracking error. There is no assurance that the investment objective of the Scheme will be achieved.
Top 10 stocks of the Nifty Top 10 Equal Weight Index Fund as of July 2024
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Company Name
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Weight (%)
|
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Infosys Ltd
|
11.4
|
|
ITC Ltd
|
11.0
|
|
Tata Consultancy Services Ltd
|
10.8
|
|
Hindustan Unilever Ltd
|
10.5
|
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Larsen & Toubro Ltd
|
10.0
|
|
Reliance Industries Ltd
|
9.7
|
|
Kotak Mahindra Bank Ltd
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9.6
|
|
ICICI Bank Ltd
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9.5
|
|
HDFC Bank Ltd
|
8.9
|
|
Axis Bank Ltd
|
8.6
|
Nifty Top 10 Equal Weight TRI by Sector
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Sector
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Weight (%)
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Financial Services
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36.6
|
|
Information Technology
|
22.2
|
|
Fast Moving Consumer Goods (FMCG)
|
21.5
|
|
Construction
|
10.0
|
|
Oil, Gas & Consumable Fuels
|
9.7
|
"While we have seen an increasing level of interest in small and Mid-Cap stocks, the very large and mega-cap stocks appear to be trading at relatively more attractive valuations. Sound investing principles suggest that it is always better to invest where there is a relatively lower valuation and margin of safety. Hence, we are considering an index which will have the largest ten stocks, in an equal-weight strategy. The Nifty Top 10 Equal Weight Index can be part of long-term portfolios as it provides exposure to the largest companies which can help to reduce drawdowns during downturns and can also generate better returns over the long term," said Anil Ghelani, CFA, Head – Passive Investments & Products, DSP Mutual Fund.
Should you invest?
The scheme is ideal for investors aiming for long-term capital growth by investing in equity and equity-related securities that are part of the Nifty Top 10 Equal Weight Index, with consideration for potential tracking errors.
Disclaimer: The article is for informational purposes only and not investment advice.